ONLY 4% OF MALE DIRECTORS SAY GENDER QUOTAS ARE HELPFUL

Only 4% of male directors want to bring in gender quotas – compared to 45% of women

12% of directors say appointing more women on boards will damage performance

Despite having failed to hit the first target for the number of women on boards set out in The Davies Report, the UK’s directors are still opposed to the idea of quotas according to research from non-executive search firm Hanson Green and private equity recruiter Directorbank in partnership with MM&K, the remuneration consulting firm.

In Life in The Boardroom, a report which polled the views of 488 directors – 298 Chairmen and 190 non-executive directors covering almost 1300 UK Board appointments – non-executive directors were asked if they thought quotas would be helpful in the UK. Only 6.6% thought quotas would be helpful .

Ken Brotherston, Executive Chairman of Directorbank said, “Board appointments should be made on the basis of business needs, skills and ability – no one wants to forfeit merit. But it’s hard to believe that in a country that’s home to 32 million women, we should need legislation and quotas to find another 100 senior women capable of filling board-level roles in the FTSE100. If companies don’t want to be micromanaged and dictated to by government, they need to do more to solve the problem themselves.”

The findings suggest quotas may be particularly unpopular with the UK’s Chairmen. Only 5.6% of Chairmen polled by Directorbank think the introduction of quotas would be helpful. 11% of responses collected by Lord Davies (from a much more diverse sample of the business population) recommended the introduction of quotas .

Directorbank also found responses differ significantly according to gender. 44.8% of female board directors thought quotas would be helpful in the UK – while just 4.02% of men felt the same way.

The UK is unlikely to hit Lord Davies’ target of 25% female board representation by 2015 and is already falling behind his forecasts. Davis assumed 33% of all new board appointments would be women following the guidance he laid out in his report – and that women would therefore make up 15% of boards by 2011. But the research suggests, if the increase in women stays at current levels, the 25% target is unlikely to be hit until 2017.

Ken Brotherston, Executive Chairman of Directorbank said, “Despite some progress over the last twelve months, we still aren’t going to hit 25% by 2015. That’s a shame, given Davies’ goal was relatively unambitious. His targets were considerably lower than those currently being deliberated by the European Commission and lower than those set by countries that have opted for legislation and quotas. UK boards should realise that as a result of these findings, it’s a lot harder to ignore the argument for quotas.”

SHORTAGE OF WOMEN

In the past, the majority of non-executives have been appointed as a consequence of their executive experience. This has lead to a shortage of potential female non-executive directors. Of the 3,324 executive directorships analysed by Directorbank in the report, only 380 – or 11% – were held by women.

Ken Brotherston said, “Traditionally, searches for new non-executive directors have focused on a pool of candidates with previous board experience. But, realistically, there are too few women on executive boards to make any progress this way. Executive search firms can help find suitable candidates by looking outside the corporate mainstream – but they will need the support of Chairmen and, increasingly, major shareholders.”

THE IMPACT OF WOMEN ON BOARDS

59% of the directors polled said having more women on the board would make no difference to performance while 20% said they thought it would improve performance. 12% said it would make performance worse.

There is, however, a strong and growing bias towards encouraging the appointment of women directors (see Figure 2).

Although 3% of the directors polled by Directorbank and Hanson Green said the appointment of women to boards should be encouraged less and 40% were neutral, 57% think said they thought the appointment of women should be encouraged more. Last year only 50% said the appointment of women to boards should be encouraged more – and the previous year it was only 43%.

Cliff Weight, Director of MM&K, said, “There has been some progress. NEDs views are changing and momentum is building. These are encouraging results and FTSE 100 companies are leading the way. However, to change the views of some Chairmen, quotas are the only answer that will work.”